October 07, 2008

China issues first batch of coal export quotas for 2008

China's National Development & Reform Commission has recently issued the first batch of coal export quota totaling 31.8 million tonnes for 2008 to four state owned coal producers.

The four qualified companies are
1. China Shenhua Group
2. China National Coal Group
3. China Minmetals Import & Export Corp
4. Shanxi Coal Import & Export Group.

As per report Beijing has continuously slashed coal export quota over the years. The tonnage has once reached 100 million tonnes in 2003 and held steady at 80 million tonnes during 2004 to 2006 and dropped to 70 million tonnes in 2007. In 2008, the export quota is expected to be cut by 17 million tonnes to 53 million tonnes.

Mr Gao Yaokun, a Beijing based coal trader at CC Carbon Pte told Bloomberg that “Chinese coal producers, especially the listed companies, will want to export their spot supplies as overseas prices are higher. Domestic coal prices are at USD 90 a tonne while international prices are close to USD 130 a tonne.''

Mr Gao added that “The second batch of quotas would probably be issued later in June or as late as August. The government would look at the demand in the first half of the year before it decides on the second batch of quotas.''

China had ordered domestic shipping companies to halt coal exports during the Lunar New Year in early February and the National People's Congress meeting in March to ease shortages and the announcement of the quota is likely to remove the immediate pressure on coal prices and puts a cap on spot prices.